Wednesday, October 29, 2008

Once all the popcorn is popped, I anticipate a very choppy rally.And filling the gap around 110.

The one thing that makes lean towards we are in a bottoming process is the fact that the bull/ bear battle has not been won by either side. It has only been bloody.

Oct 21 a bullish inverted head and shoulders/ W pattern that failed. Very bearish.

Oct 28 a 2nd retest on lows that failed to break down. V bullish.

Right now, just more choppiness.

The credit situation is easing somewhat so that is definitely a positive factor for the markets. And we know that we are in a recession for sure, it is priced in. Not that I believe recovery is around the corner, there will be forward looking people looking to scoop up from what's left from the carnage.

I am pretty neutral now although if we crack the lower level of support in SPY around 84 we will probably crash hard. Conversely if we break above 100-105 we would be in the clear. That's a big range to trade if you are alert. But it will probably be messy.

The 2 reasons are these. One is the heavy volume that is making it hard for shorts or longs to move for more than a couple days. The other is the upcoming election. Seems like the market keeps getting saved right when you think is it going to go under...

If we dont break previous lows, I do think we could form a base here and eventually crawl back up.

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